Home Depot Inc (HD.N), the No. 1 U.S. home improvement chain, reported better-than-expected profit and sales for the third quarter, helped by higher traffic and more spending at its stores.

The company, which has benefited from demand for new homes in the U.S. as well as rising wages and consumer spending, also slightly raised its full-year earnings forecast.

Home Depot's shares were up 2.7 per cent at US$131.09 in premarket trading on Tuesday.

The company's sales at established stores rose 5.5 per cent in the three months ended Oct. 30.

Analysts on average had expected an increase of 4.4 per cent, according to research firm Consensus Metrix.

Home Depot's net sales rose 6.1 per cent to US$23.15 billion in the quarter.

Net earnings rose to US$1.97 billion, or US$1.60 per share, from US$1.73 billion, or US$1.35 per share.

Analysts on average had expected a profit of US$1.58 per share on sales of US$23.04 billion, according to Thomson Reuters I/B/E/S.

Home Depot now expects earnings for the year ending January 2017 to be US$6.33 per share, up from its previous forecast of US$6.31.